Industry Offers Rankings, Recommendations On Illicit Trade In Asia

Australia, New Zealand and Hong Kong lead the way on preventing illicit trade, followed by Japan and South Korea, according to an industry index released this week. China came in slightly above midpoint on the index, while Lao and Myanmar were at the bottom. Among the recommendations by industry were to establish custom information systems and infringement procedures to deter illicit trading. Intellectual property protection was rated as fundamental in the fight against such trade.

The Illicit Trade Environment Index, produced by the Economist Intelligence Unit (EIU), ranked 17 Asian economies on the extent to which they enable illicit trade. The report can be found here [pdf].

Both the report and separate recommendation paper were commissioned by European Chamber of Commerce in Singapore (EuroCham) and were released this week. EuroCham represents the common interests of the European business community in promoting bilateral trade, services and investments between Europe and Singapore and Asia-Pacific. It is composed of the European national business groups in Singapore as well direct corporate members.

The report’s executive summary, explains that “the volume of counterfeit and mis-declared goods, drugs, weapons and other types of illicit trade moving across borders has been increasing and will continue to do so.”

Report author Chris Clague said in the report: “Illicit trade poses a threat to public health, the environment and innovation, and provides funds for transnational crime networks and terrorist organisations.”

The Index: IP, Laws for Protection and Enforcement

The report found that protection of intellectual property “is fundamental to preventing the manufacture of and trade in counterfeit and pirated goods” and placed IP protection as the first of the index’s four main pillars. Tied to this is the importance of enforcement.

Nick Redfearn, deputy CEO and partner at Rouse, a global IP consultancy, said in the report that “As economies become wealthier, there is less acceptance of low-level criminality and more people who pay their taxes and register their businesses, as well as an increasing consumer preference for real goods.”

Australia and New Zealand score the highest in the Index, with comprehensive IP laws that are strongly enforced and because they have a customs recordal for IP owners to register trademarks, patents and copyrights.

According to the report, Singapore’s IP laws and enforcement are as strong, but it is the only developed country in the Index that does not have a customs recordal, which lowers its score in the category.

Redfearn added that “if customs intercepted just a few more shipments, and some economies punished more than the zero people they are punishing now, it would at least give those traders pause.”

Overall the report found: “Nine of the seventeen economies in the Index offer a customs recordal, which, depending on the country, allows trademark, copyright, or patent owners—and in some economies, all three—to register their IP with the customs agency. This, in turn, empowers customs to interdict shipments suspected of containing goods that infringe on registered IP without a specific request from the IP owner. In the absence of a recordal, customs agencies tend to act only on a specific request and even then, only if the IP owner posts a “seizure bond,” the cost of which can, in some economies, have a chilling effect on the ability of IP owners to make such requests.”

Recommendations

The Recommendation Paper to Combat Illicit Trade was produced by KPMG and makes recommendations in three policy categories. The first is the enhancement of intellectual property rights protection to facilitate the interests of enforcement bodies, brand owners and intermediaries.

Practical recommendations in the paper included:

• Introducing and implementing a digital customs recordal system where key information (e.g. IP rights, contact details, authorised shippers etc.) can be easily accessed by enforcement officers.
• Streamlining enforcement processes by reviewing the requirement for bond payment and adopting remote product verification (e.g. email photos).
• Setting out private vs. public duties such as reviewing the requirements for civil infringement actions for continued detention and disposal of seized goods. Likewise, make brand owners responsible for pursuing civil liability but the government will publicly prosecute to prove criminal liability and to obtain a Court Order to dispose of the seized goods.

The other categories of recommendations were “Public-Private Partnerships Collaboration” between stakeholders and “Free Trade Zone Governance.”

Alexandra Nightingale is a researcher at Intellectual Property Watch. She completed her Bachelors in Law at the University of Sussex and holds an LLM degree in International Law from the School of Oriental and African Studies in London. During her Masters, she developed a strong interest in Intellectual Property, particularly patents and the aspects relating to global health. Her research interests now also include geographical indications and trademarks.

 

Image Credits: EuroCham